Impact Of H1-B Wage Hike On The IT Industry

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For decades, the USA has been considered as a land of opportunities by many individuals and companies uniformly. The H1-B visa proved to be a ray of hope for workforce residing outside the country. However, with the recent changes that were proposed by the incumbent government, a drastic overhaul is expected in many specialty occupations, including the IT sector. According to the new H1-B visa rules, non-immigrant workers are entitled to a 47% wage increase across all four levels. The new rules were received as a welcome step by some, while many companies termed this move as disastrous.

Inevitable as it may seem, the backlash against the new rule turned out to be stronger than expected, with US immigration attorneys filing a lawsuit against the Department of Labour, opposing the wage increase. The US elections, scheduled this November are being seen as the real motivation behind this wage increase. The Trump administration has been vocal all throughout about protecting the jobs of Americans. By implementing the new rule, the incumbent government has ensured that companies hire local IT talent rather than sourcing it from India. In their quest to garner all the attention before the elections, the new H1-B rule could be considered as their wild card to strengthen their voter base.

Indian IT companies make a revenue of about 60% from the US by providing high quality products and services. The previous policy pertaining to the H1-B visa allowed Indian companies to replace and hire talent whenever costs shot up. However, the current policy is expected to place a huge financial burden on these companies and force them to completely change their employment and management styles. Many IT bosses are of the opinion that the new H1-B visa rules will eat into their company’s profits, thereby creating a downward pressure on margins. In such tough times, the only glimmer of hope for all the concerned IT companies is the lawsuit which emphasizes on the need for a public review of the new rule.

A possible remedy to the restrictions imposed by the new rule had been doing the rounds last week. Some experts suggest that remote working could prove to be a saviour in the present situation as the pandemic has already forced companies to create a streamlined Work From Home environment for their employees. But the only hindrance to the adaptation of the remote working model is the Labor Condition Application (LCA) which makes it mandatory for companies to employ a workforce locally. Whether or not the new rule has been well-thought about is a debatable issue, but it surely has created panic among thriving Indian IT companies.

Dinesh Vaswani

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